Madoff Business Associate De La Villehuchet Found Dead

Thierry Magon de La Villehuchet, a well-respected French investment fund manager who put at least $1.4 billion of his clients' money -- and perhaps much or all of his own wealth -- in the hands of alleged Ponzi scheme operator Bernard Madoff, appears to have committed suicide in his Manhattan office, according to police officials.

De La Villehuchet, 65, was found inside the Madison Avenue offices of his investment group, Access International Advisors, at about 7:30 a.m. this morning and pronounced dead at 8 a.m., according to the New York City Medical Examiner.

He was found seated at his desk, where he apparently had bled to death after taking an overdose of sleeping pills and then slashing his arm, bicep and his wrists, police said.

"They found the man at his desk," New York City Police Commissioner Raymond Kelly said. "There was no suicide note. It appears there were cuts made to his arm, to his wrist and also to his bicep area with a box cutter." Villehuchet's family in New York has been notified of the death, according to officials.

European fund managers who knew de La Villehuchet described him to ABCNews.com as a man who inspired "a lot of respect, honour, humanity, kindness and generosity." They said Villehuchet had a strong belief in Madoff and had not only committed his own money to Madoff, but did so with 150 percent leverage -- in effect, his potential losses were greater than his actual wealth.

Access International's LUXALPHA SICAV-American Selection fund invested solely with Madoff, and is one of several large funds that has been the subject of the ongoing federal investigation into what prompted them to place large amounts of client money with Madoff despite red flags that had been raised for well over a year by some inside the hedge fund community. The fund had at least $1.4 billion and perhaps closer to $2 billion in money under management, placing it in the top tier of funds that appear to have lost most if not all of their investment in the scandal.

A French business journal today quoted a person close to the Villehuchet family as saying, "for the past week, he had tried day and night to find a way to recoup his investors' money and had begun legal action in the United States against U.S. authorities. He could not stand the hunt for culprits launched by the Europeans. This is a farewell from someone who had done nothing wrong. The truth is that everyone wanted to invest with Madoff, considered by everyone to be AAA, i.e. absolute security."

The U.S.-based Fairfield Greenwich Group investment operation was one of the first to disclose such losses -- acknowledging shortly after Madoff's arrest earlier this month a loss of $7.5 billion from its Fairfield Sentry fund.

Walter Noel, a founding partner of FGG, whose press operation has called his firm one of Madoff's first victims, has recently been seen at some of New York's toniest holiday parties wearing a red velvet jacket.

The list of known Madoff victims has continued to grow in the days following his alleged admission to the FBI that he ran a Ponzi scheme that, for more than 30 years, had fleeced investors -- using the money from each fresh crop of investors to pay earlier marks the steady rate of return that they had come to expect. As it developed, the elaborate investment model he described to his investors as the basis for his ability to provide year in, year out double digit returns, allegedly was nothing but a smoke screen.

De La Villehuchet's body has been released to the New York City medical examiner. While there was nothing contained in the initial police reports to indicate the death was anything other than a suicide, no official cause of death has been released. The medical examiner did not expect to rule until at least tomorrow.

Was Madoff Running a Ponzi Scheme?

Madoff made headlines earlier this month when an unsealed criminal complaint in federal court in New York charged that he has been running the decades-long Ponzi scheme that defrauded investors of $50 billion.

A former chairman of NASDAQ, Madoff was an investment advisor who catered to a handful of high net worth clients, one of whom told ABC News that Madoff was so sought after that, as recently as two months ago, he was turning down potential new business. His handful of clients routinely expected -- and received -- double digit returns, up market or down.

Bernard Madoff Investment Securities and the SEC

According to an SEC document filed in January 2008, and cited in the complaint, the firm had between 11 and 25 clients for the fiscal year ending October 2007, and managed about $17 billion in assets in 23 different accounts. As it has developed, it appears there were thousands of investors stung by Madoff's alleged scam.

Bernard Madoff Investment Securities, in addition to that private client practice, was also a market maker that trades with other dealers in bonds, the S&P 500 and NASDAQ, according to Bloomberg News.

The firm was the 23rd largest market maker on NASDAQ in October, handling a daily average of about 50 million shares a day. The firm specialized in handling orders from online brokers in some of the largest U.S. companies, including General Electric Co. and Citigroup Inc., Bloomberg News reported.

But on Dec. 10, Madoff allegedly told senior employees at his firm that his entire business was a fraud. According to the federal complaint, Madoff told those employees that he was "finished" and that "it's all one big lie." Madoff estimated "the losses from the fraud to be at least approximately $50 billion," the complaint states.

At that time Madoff also told those employees that he intended to surrender to authorities, but before he did, he planned to use $200 million to $300 million he had left to make payments to "selected employees, family and friends," the complaint states.

Madoff started his business in 1960 with $5,000 in savings. He resides in New York City and, according to clients, also maintains a posh waterfront home. Known to his clients as Bernie, he has a long and significant history on Wall Street, has been a NASDAQ chairman of the board, and was a founding member of the board of the International Securities Clearing Corp. in London.

In its company profile, the Web site for Madoff's firm says, "Clients know that Bernard Madoff has a personal interest in maintaining the unblemished record of value, fair-dealing, and high ethical standards that has always been the firm's hallmark."

Madoff was arrested earlier this month by FBI agents and charged with criminal securities fraud by federal prosecutors in Manhattan. The complaint states that he used "manipulative and deceptive practices." The complaint also cites two senior employees describing how Madoff kept his client records "under lock and key" and how he left them in the dark about how he managed the private client funds. One of those employees, in interviews with the FBI, said that Madoff was "cryptic" in his statements. This, according to clients, is in keeping with the aura that Madoff cultivated among his clients, some of whom have kept funds under management with him for generations.

Complaint: Madoff Struggled to Obtain Liquidity in December

But by the first week of December, when clients began clamoring for redemptions -- to the tune of $7 billion -- the complaint states that Madoff began a struggle to obtain the necessary liquidity. The stress began to show, employees said.

In a meeting at their boss's Manhattan apartment -- held there following a confrontation in the office because Madoff wasn't sure "he would be able to "hold it together" if the conversation took place in the office -- the employees came away believing that Madoff was "saying, in substance, that he had for years been paying returns to certain investors out of the principal received from other, different investors."

The next day, Dec. 11, Madoff spoke with FBI agent Theodore Cacioppi and invited the agent and another agent to his apartment. Cacioppi stated in the complaint that he told Madoff he came by to see if "there's an innocent explanation."

"There is no innocent explanation," Madoff replied, according to the sworn complaint.

Madoff's lawyer, Dan Horwitz, a partner at Dickstein Shapiro in New York, has said his client is cooperating fully with the federal investigation.

"Bernie Madoff is a long-standing leader in the financial services industry and he is cooperating fully with the government investigation into this unfortunate set of events," Horwitz said.

Madoff was released on $10 million bond following a court appearance in Manhattan and is expected back in court today.